Maine may be central as oil flow shifts east

Maine has been a transit point for crude oil flowing west to Canada for 72 years.

More than 4 billion barrels have been pumped from tankers in Portland Harbor since World War II, when the Portland-Montreal Pipe Line was built to thwart enemy warships that threatened tanker traffic to Canada.

On one side are environmental activists. They say a hard-to-extract, corrosive crude oil that will speed global climate change and raise the risk of pipeline leaks will soon begin flowing east across Maine.

On the other side are pipeline companies. They downplay the effects of extracting and moving the controversial crude. They also stress that there are no current plans to reverse the pipeline’s flow and pump crude 236 miles from Montreal to Portland.

But several ongoing developments in North America’s petroleum market suggest that the flow of crude oil already is shifting east, and Maine is seeing the start of the trend.

Late last month, a train carrying 104 tank cars filled with crude traveled 2,435 miles from the Bakken oil fields of North Dakota across Maine to the Irving Oil refinery in Saint John, New Brunswick. First reported outside of trade journals by the Portland Press Herald, the test trip signifies how far Canada’s largest refinery will go for a cheaper source of petroleum.

The Bakken fields contain oil that’s locked in shale formations. It’s released by injecting pressurized water and chemicals, a controversial process called fracking.

The Bakken deposits have made North Dakota the nation’s fourth-largest oil producer, and railroads say they expect Irving to take increased quantities from there in the months ahead.

Irving apparently has a deal with an American fuel broker to ship as much as 15,000 barrels of Bakken crude daily to Saint John later this summer, according to the Telegraph-Journal of New Brunswick. The route was not disclosed, but could include Maine.

Railroads also have begun moving test quantities of Canadian tar-sands oil across Maine, and are preparing to transport more.

Canada sits atop the world’s second-largest proven petroleum reserves. New technologies and rising oil prices have made our northern neighbor the biggest single source of imported crude for the United States. Imports to the United States are projected to triple over the next 10 years, the federal Energy Information Administration estimates.

Most of that crude is bitumen, a tar-like oil as thick as peanut butter, buried in sand deposits under Alberta. Large volumes of energy and water are needed to extract bitumen. It’s then diluted with natural gas compounds so it can flow through pipelines.

Despite the challenges, maximizing the economic potential of so-called tar sands deposits is a national ambition for Canada. There’s so much oil in Alberta, and billions of dollars to be made extracting and exporting it, that energy companies are working on multiple fronts.

They want to build or repurpose pipelines heading west, to British Columbia, for export to Asia; heading south to the United States’ Gulf Coast and — most relevant for Maine — east to Quebec.

The rush to transport diluted bitumen helps explain the recent actions of TransCanada Corp., which faces opposition to its Keystone XL pipeline to the Gulf Coast.

TransCanada recently proposed converting a natural-gas pipeline to move tar-sands oil to refineries in Ontario and Quebec. From Montreal, oil could move on the St. Lawrence River, or in the Portland Pipe Line, and to American East Coast refineries, according to published reports.

The potential also shows why TransCanada’s chief Canadian pipeline rival, Enbridge Corp., announced in May that it will seek permits to reverse the flow of a 240,000 barrel-per-day line between Westover, Ontario, and Montreal, to bring Alberta oil to refineries in Quebec.

Enbridge doesn’t own the pipeline east of Montreal. It’s the property of Montreal Pipe Line Ltd., the parent company of the Portland-Montreal Pipe Line.

Last winter, Montreal Pipe Line lost a court case in Quebec over efforts to build a pumping station on the Quebec-Vermont border. The station was seen by the Montreal-based environmental group that challenged it as a step in moving tar-sands oil east to Portland. The pipeline company is partly owned by Suncor, the Canadian energy giant that is among the largest producers in the Alberta tar sands.

On this side of the border, the system is operated by Portland Pipe Line Corp. The South Portland company recently declined to take a Press Herald reporter on a tour of its facilities and discuss pipeline safety, flow reversal and other issues. It does maintain a message on its website meant to clarify the company’s position on moving bitumen from western Canada.

It reads, in part: “(we) do not currently have an active project associated with moving Western Canadian crudes in an easterly flow direction through our pipelines.”

It also says: “… we will continue to consider potential projects that align with the mission of our company.”

Environmental groups in the United States and Canada oppose bitumen extraction because of the air and water pollution it causes, as well as its impact on climate change from burning large quantities of natural gas. They call diluted bitumen “the dirtiest oil on Earth.” By fighting pipelines, they hope to stall tar-sands development.

Four years ago, Enbridge introduced a project called Trailbreaker, to move diluted bitumen 524 miles from Alberta to Montreal and — eventually through the Portland-Montreal Pipe Line — to the East Coast. That project was shelved in the recession, but environmental groups say pipeline companies now hope to accomplish the same thing through smaller, separate projects.

“By breaking it up into parts, it makes it harder for the public to follow and easier to get through the permit process,” said Glen Brand, director of the Sierra Club chapter in Maine.

A spokesman for Enbridge disputes that charge. The company is focused on reversing the flow of so-called Line 9, to serve refineries in Montreal through Canadian pipelines. If the project is approved, refiners will tell Enbridge what they need for capacity, according to Graham White.

“Trailbreaker was to take crude through U.S. pipe to the East Coast for transport to the Gulf Coast,” White said. “This is a totally different concept and a different project.”

The high demand leads conservation groups to expect that the eastern flow reversal through Maine is just a matter of time.

Dylan Voorhees, clean energy director with the Natural Resources Council of Maine, said he’s keeping his eye on some key benchmarks this year in Canada.

This summer, Canada’s National Energy Board is likely to approve Enbridge’s first phase of the Line 9 reversal, from Sarnia, Ontario, to an Imperial Oil refinery in Westover Station, Ontario.

By fall, an application for the second phase, the Line 9B reversal from Westover, Ontario, to Montreal, is likely to be before the National Energy Board.

East of Quebec, Montreal Pipe Line Ltd. would have to submit a new application for its pumping station. The company didn’t appeal the Quebec court decision.

“This is going to evolve over several months,” Voorhees said. “I wouldn’t be surprised if there’s a proposal to reverse the flow through Maine before 2013.”

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